ADDIS ABABA, May 28 – Ethiopia has failed to secure a breakthrough in negotiations with international bondholders after investors rejected the government’s latest debt restructuring proposal, extending a sovereign default that began in late 2023.
The breakdown followed talks held between May 6 and May 27 as authorities continued efforts to restructure the country’s external obligations under the Group of 20 Common Framework initiative.
According to Ethiopia’s finance ministry, the latest proposal would have required bondholders to accept an estimated 12% reduction on the value of their holdings.
The negotiations involve Ethiopia’s $1 billion Eurobond that matured in 2024 and entered default after the government failed to make scheduled payments in December 2023.
Under the latest proposal, investors would have recovered approximately $880 million of the original principal through new terms carrying an interest rate of 6.15%, slightly below the bond’s original 6.625% coupon rate.
The government said it remains committed to pursuing a market-based solution and will continue engaging with creditors while evaluating alternative approaches, including a possible exchange offer or other market transactions linked to the defaulted notes.
Earlier this year, some bondholders reportedly began legal processes aimed at pursuing repayment claims against the government.
Ethiopia also proposed settling roughly $100 million in overdue interest payments as part of the restructuring package.
The latest negotiations followed earlier complications involving official bilateral creditors co-chaired by China and France.
Those creditors had previously rejected an earlier restructuring arrangement between Ethiopia and bondholders because certain incentives offered to private investors were not reflected in agreements reached with official lenders.
The finance ministry said the revised proposal presented during the latest talks had already been reviewed by official creditor representatives and was considered consistent with comparability-of-treatment requirements under the Common Framework process.
Ethiopia has been attempting to stabilize its finances after years of economic strain linked to conflict, foreign exchange shortages, inflation pressures and rising debt-servicing obligations.
The prolonged restructuring process continues to weigh on investor confidence and broader efforts to restore access to international capital markets.
